2020 (3) TMI 229 - HC - Income Tax

Deduction claimed under section 80-IB(10) - notify the industrial park of the petitioner under rule 18C of the Income-tax Rules, 1962 - HELD THAT - It is not in dispute that the petitioner had applied for the occupancy certificate along with the architect's certificate before the Bangalore Development Authority on December 29, 2006 well within the stipulated period of one year as enumerated in condition No. 5(ii) of the approval under the Scheme 2002 and the said occupancy certificate was issued on June 23, 2007. The delay caused by the authority in issuing the occupancy certificate would not obliterate the rights of the petitioner to avail of the benefit under section 80-IA(4) of the Act vitiating the very purpose of the approval granted by respondent No. 2. If the compliance is made on the part of the petitioner, the same cannot be frustrated on technicalities or minor deviations by applying the Industrial Park Scheme 2008 which was not in force during the relevant period. The arguments of the learned counsel for the Revenue on these grounds requires to be negated. The action of the respondent No. 1 instructing respondent No. 2 vide official memorandum dated March 1, 2012 to withdraw the approval suffers from the vice of arbitrariness and lacks jurisdiction. In terms of the Scheme 2002, respondent No. 1 is empowered to issue the notification under rule 18C of the Rules in compliance with the approval order of respondent No. 2 not to adjudicate upon it. The language employed in the official memorandum impugned would not indicate that the instructions therein were only recommendatory. Even if the same to be construed as recommendatory, no such recommendation has been accepted by respondent No. 2. Respondent No. 1 is directed to notify the petitioner's industrial park under rule 18C of the Income-tax Rules, 1962 in terms of the Industrial Park Scheme, 2002 in an expedited manner, in any event, not later than three months from the date of receipt of certified copy of the order.

Summary

Issues Involved:
1. Jurisdiction and authority of respondent No. 1 to withdraw approval granted by respondent No. 2.
2. Compliance with the conditions of the Industrial Park Scheme, 2002.
3. Interpretation of "date of commencement" under the Industrial Park Scheme, 2002.

Issue-wise Detailed Analysis:

1. Jurisdiction and Authority of Respondent No. 1:
The petitioner contended that respondent No. 1 lacked jurisdiction to direct respondent No. 2 to withdraw the approval granted under the Industrial Park Scheme, 2002, without providing an opportunity of hearing to the petitioner, which violates the principles of natural justice. The court found that the action of respondent No. 1 instructing respondent No. 2 to withdraw the approval was arbitrary and lacked jurisdiction. The court held that respondent No. 1 is empowered to issue the notification under rule 18C of the Income-tax Rules, 1962, in compliance with the approval order of respondent No. 2, not to adjudicate upon it. The language in the official memorandum did not indicate that the instructions were merely recommendatory, and even if they were, no such recommendation was accepted by respondent No. 2.

2. Compliance with the Conditions of the Industrial Park Scheme, 2002:
The petitioner argued that the industrial park commenced operations within the stipulated period, as evidenced by the provisional completion certificate issued by the architect on December 26, 2006, and the application for the occupancy certificate filed on December 29, 2006. The court noted that the quarterly returns submitted before respondent No. 2 disclosed the date of commencement as March 15, 2007, which was within one year from the expected date of commencement mentioned in the approval order. The court emphasized that the delay caused by the authority in issuing the occupancy certificate on June 23, 2007, should not obliterate the petitioner's rights to avail of the benefits under section 80-IA(4) of the Income-tax Act, 1961.

3. Interpretation of "Date of Commencement" under the Industrial Park Scheme, 2002:
The court rejected the Revenue's argument that the "date of commencement" should be linked to the issuance of the occupancy certificate by the competent authority, as there was no such reference in the Scheme 2002. The court held that the definition clause of Scheme 2008 could not be borrowed to deny the benefit of Scheme 2002. The court cited various judgments, including CIT v. Tarnetar Corporation, CIT v. Ceebros Hotels (P.) Ltd., and Pr. CIT v. Ambey Developer P. Ltd., to support the view that substantial compliance with the conditions should be considered, and minor deviations should not vitiate the purpose of the approval.

Conclusion:
The court directed respondent No. 1 to notify the petitioner's industrial park under rule 18C of the Income-tax Rules, 1962, in terms of the Industrial Park Scheme, 2002, within three months from the date of receipt of the certified copy of the order. The writ petition was disposed of accordingly.